10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 ------------------------------------------------ OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ----------------- Commission File Number 0-18014 ------- PAMRAPO BANCORP, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEW JERSEY 22-2984813 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 611 Avenue C, Bayonne, New Jersey 07002 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 201-339-4600 ----------------------------- Indicate by check X whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ --- The number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date April 30, 2001. -------------- $.01 par value common stock - 2,577,737 shares outstanding PAMRAPO BANCORP, INC. AND SUBSIDIARIES INDEX
Page PART I - FINANCIAL INFORMATION Number --------- Item 1: Financial Statements Consolidated Statements of Financial Condition at March 31, 2001 and December 31, 2000 (Unaudited) 1 Consolidated Statements of Income for the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2 Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2001 and 2000 (Unaudited) 3 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 (Unaudited) 4 - 5 Notes to Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 10 Item 3: Quantitative and Qualitative Disclosure About Market Risk 11 - 12 PART II - OTHER INFORMATION 13 - 14 SIGNATURES 15
PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (Unaudited)
March 31, December 31, ASSETS 2001 2000 ------ --------- ------------ Cash and amounts due from depository institutions $ 12,743,463 $ 12,553,854 Interest-bearing deposits in other banks 19,200,000 1,700,000 ------------- ------------- Total cash and cash equivalents 31,943,463 14,253,854 Securities available for sale 5,602,139 5,713,206 Investment securities held to maturity; estimated fair value of $6,986,000 (2001) and $6,886,000 (2000) 6,996,386 6,996,297 Mortgage-backed securities held to maturity; estimated fair value of $115,842,000 (2001) and $119,328,000 (2000) 113,949,350 118,791,206 Loans receivable 314,774,490 309,082,076 Foreclosed real estate 490,072 620,072 Investment in real estate 237,306 240,998 Premises and equipment 5,043,967 5,042,595 Federal Home Loan Bank stock, at cost 3,796,100 3,496,200 Interest receivable 2,854,399 2,765,984 Other assets 3,035,485 2,555,760 ------------- ------------- Total assets $ 488,723,157 $ 469,558,248 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits $ 398,519,635 $ 379,409,856 Advances from Federal Home Loan Bank of New York 35,583,100 35,583,100 Other borrowed money 198,464 204,962 Advance payments by borrowers for taxes and insurance 2,698,244 2,531,694 Other liabilities 5,441,328 5,300,127 ------------- ------------- Total liabilities 442,440,771 423,029,739 ------------- ------------- Stockholders' equity: Preferred stock; authorized 3,000,000 shares; issued and outstanding - none -- -- Common stock; par value $.01; authorized 7,000,000 shares; 3,450,000 shares issued; shares outstanding 2,577,737 (2001) and 2,597,737 (2000) 34,500 34,500 Paid-in capital in excess of par value 18,906,768 18,906,768 Retained earnings - substantially restricted 46,448,095 46,332,436 Unrealized gain on securities available for sale, net 116,811 73,593 Treasury stock, at cost; 872,263 shares (2001) and 852,263 shares (2000) (19,223,788) (18,818,788) ------------- ------------- Total stockholders' equity 46,282,386 46,528,509 ------------- ------------- Total liabilities and stockholders' equity $ 488,723,157 $ 469,558,248 ============= =============
See notes to consolidated financial statements. -1- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (Unaudited)
Three Months Ended March 31, ----------------------- 2001 2000 ---------- ---------- Interest income: Loans $6,447,933 $5,592,076 Mortgage-backed securities 1,987,343 2,093,945 Investments and other interest-earning assets 341,329 421,728 ---------- ---------- Total interest income 8,776,605 8,107,749 ---------- ---------- Interest expense: Deposits 3,945,571 3,178,131 Advances and other borrowed money 515,114 448,043 ---------- ---------- Total interest expense 4,460,685 3,626,174 ---------- ---------- Net interest income 4,315,920 4,481,575 Provision for loan losses 60,000 60,000 ---------- ---------- Net interest income after provision for loan losses 4,255,920 4,421,575 ---------- ---------- Non-interest income: Fees and service charges 264,470 250,532 Miscellaneous 178,132 128,631 ---------- ---------- Total non-interest income 442,602 379,163 ---------- ---------- Non-interest expenses: Salaries and employee benefits 1,661,886 1,667,888 Net occupancy expense of premises 327,198 300,012 Equipment 299,525 282,631 Advertising 45,307 133,320 Federal insurance premium 18,484 18,970 Amortization of intangibles -- 30,325 Miscellaneous 693,950 670,189 ---------- ---------- Total non-interest expenses 3,046,350 3,103,335 ---------- ---------- Income before income taxes 1,652,172 1,697,403 Income taxes 608,528 612,431 ---------- ---------- Net income $1,043,644 $1,084,972 ========== ========== Net income per common share: Basic/diluted $ 0.40 $ 0.40 ========== ========== Dividends per common share $ 0.360 $ 0.345 ========== ========== Weighted average number of common shares and common stock equivalents outstanding: Basic/diluted 2,587,848 2,683,034 ========== ==========
See notes to consolidated financial statements. -2- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ----------------------------------------------- (Unaudited)
Three Months Ended March 31, -------------------------- 2001 2000 ----------- ----------- Net income $ 1,043,644 $ 1,084,972 ----------- ----------- Other comprehensive income (loss), net of deferred income taxes: Gross unrealized holding gain (loss) on securities available for sale 67,618 (35,649) Deferred income tax (benefit) (24,400) 12,800 ----------- ----------- Other comprehensive income (loss) 43,218 (22,849) ----------- ----------- Comprehensive income $ 1,086,862 $ 1,062,123 =========== ===========
See notes to consolidated financial statements. -3- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Three Months Ended March 31, -------------------------- 2001 2000 ----------- ----------- Cash flows from operating activities: Net income $ 1,043,644 $ 1,084,972 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment and investment in real estate 143,045 149,136 Amortization of premiums and discounts, net 44,529 59,545 Accretion of deferred loan fees, net (44,471) (71,241) Provision for loan losses 60,000 60,000 (Gain) on sales of foreclosed real estate (9,110) -- (Increase) in interest receivable (88,415) (82,766) (Increase) in other assets (504,125) (247,540) Increase in other liabilities 141,201 427,280 Amortization of intangibles -- 30,325 ----------- ----------- Net cash provided by operating activities 786,298 1,409,711 ----------- ----------- Cash flow from investing activities: Principal repayments on securities available for sale 191,370 354,054 Purchases of securities available for sale (20,811) (18,382) Proceeds from calls of investment securities held to maturity 2,000,000 -- Purchases of investment securities held to maturity (2,000,000) -- Principal repayments on mortgage-backed securities held to maturity 4,805,364 4,281,890 Purchases of mortgage-backed securities held to maturity -- (6,207,705) Proceeds from sales of student loans -- 33,633 Net change in loans receivable (5,741,207) (3,431,895) Proceeds from sales of foreclosed real estate 172,374 -- Additions to premises and equipment (140,725) (90,935) Purchase of Federal Home Loan Bank of New York stock (299,900) (253,000) ----------- ----------- Net cash (used in) investing activities (1,033,535) (5,332,340) ----------- -----------
See notes to consolidated financial statements. -4- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Three Months Ended March 31, ---------------------------- 2001 2000 ------------ ------------ Cash flows from financing activities: Net increase in deposits $ 19,109,779 $ 3,689,437 Net (decrease) in advances from Federal Home Loan Bank of New York -- (5,000,000) Net (decrease) in other borrowed money (6,498) (6,000) Net increase (decrease) in payments by borrowers for taxes and insurance 166,550 (157,812) Cash dividends paid (927,985) (913,534) Purchase of treasury stock (405,000) (1,718,123) ------------ ------------ Net cash provided by (used in) financing activities 17,936,846 (4,106,032) ------------ ------------ Net increase (decrease) in cash and cash equivalents 17,689,609 (8,028,661) Cash and cash equivalents - beginning 14,253,854 31,062,080 ------------ ------------ Cash and cash equivalents - ending $ 31,943,463 $ 23,033,419 ============ ============ Supplemental information: Transfer of loans receivable to foreclosed real estate $ 33,264 $ -- ============ ============ Cash paid during the period for: Income taxes $ -- $ -- ============ ============ Interest on deposits and borrowings $ 4,460,685 $ 3,626,174 ============ ============
See notes to consolidated financial statements. -5- PAMRAPO BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. PRINCIPLES OF CONSOLIDATION ------------------------------- The consolidated financial statements include the accounts of Pamrapo Bancorp, Inc. (the "Company") and its wholly owned subsidiaries, Pamrapo Savings Bank, SLA (the "Bank") and Pamrapo Service Corp, Inc. The Corporation's business is conducted principally through the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. 2. BASIS OF PRESENTATION ------------------------- The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and regulations S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the three months ended March 31, 2001, are not necessarily indicative of the results which may be expected for the entire fiscal year. 3. NET INCOME PER COMMON SHARE ------------------------------- Basic net income per common share is based on the weighted average number of common shares actually outstanding. Diluted net income per share is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable or which could be converted into common stock, if dilutive, using the treasury stock method. There were no potentially dilutive contracts or securities outstanding at either March 31, 2001 or 2000 or during the three months then ended. -6- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Changes in Financial Condition The Company's assets at March 31, 2001 totalled $488.7 million, which represents an increase of $19.1 million or 4.07% as compared with $469.6 million at December 31, 2000. Securities available for sale at March 31, 2001 decreased $111,000 or 1.94% to $5.6 million when compared with $5.7 million at December 31, 2000. The decrease during the three months ended March 31, 2001, resulted primarily from repayments on securities available for sale of $191,000, sufficient to offset an increase in net unrealized gain of $68,000 and purchases of $21,000. Investment securities held to maturity remained unchanged at $7.0 million at March 31, 2001 and December 31, 2000. Mortgage-backed securities held to maturity decreased $4.9 million or 4.12% to $113.9 million at March 31, 2001 when compared to $118.8 million at December 31, 2000. The decrease during the three months ended March 31, 2001, resulted primarily from principal repayments of $4.8 million. Net loans amounted to $314.8 million at March 31, 2001, as compared to $309.1 million at December 31, 2000, which represents an increase of $5.7 million or 1.84%. The increase during the three months ended March 31, 2001 resulted primarily from loan originations exceeding principal repayments. Foreclosed real estate amounted to $490,000 and $620,000 at March 31, 2001 and December 31, 2000, respectively. At March 31, 2001, foreclosed real estate consisted of six properties of which three properties with a combined book value of $213,000 are under contract for sale. Total deposits at March 31, 2001 totalled $398.5 million as compared with $379.4 million at December 31, 2000, representing an increase of $19.1 million or 5.03%. Advances from the Federal Home Loan Bank ("FHLB") remained unchanged at $35.6 million at March 31, 2001 and December 31, 2000, respectively. Stockholders' equity totalled $46.3 million and $46.5 million at March 31, 2001 and December 31, 2000, respectively. The decrease of $246,000 was primarily the result of the Company's repurchase of 20,000 shares of its common stock at an aggregate cost of $405,000, along with cash dividend paid of $928,000, offset by net income for three months ended March 31, 2001 of $1.04 million. Comparison of Operating Results for the Three Months Ended March 31, 2001 and 2000 Net income decreased $41,000 or 3.78% to $1.044 million for the three months ended March 31, 2001 compared with $1.085 million for the same 2000 period. The decrease in net income during the 2001 period resulted from an increase in total interest expense, which was partially offset by increases in total interest income and non-interest income and decreases in non-interest expenses and income taxes. Interest income on loans increased by $856,000 or 15.31% to $6.4 million during the three months ended March 31, 2001 when compared with $5.6 million for the same 2000 period. The increase during the 2001 period resulted from an increase of $41.9 million in the average balance of loans outstanding sufficient to offset a one basis point decrease in the yield earned on the loan portfolio. Interest on -7- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Comparison of Operating Results for the Three Months Ended March 31, 2001 and 2000 (Cont'd.) mortgage-backed securities decreased $107,000 or 5.11% to $1.987 million during the three months ended March 31, 2001 when compared with $2.094 million for the same 2000 period. The decrease during the 2001 period resulted from a decrease of $7.7 million in the average balance of mortgage-backed securities outstanding, sufficient to offset an increase of seven basis points in the yield earned on the mortgage-backed securities. Interest earned on investments and other interest-earning assets decreased by $81,000 or 19.19% to $341,000 during the three months ended March 31, 2001, when compared to $422,000 during the same 2000 period primarily due to a decrease of $5.9 million in the average balance of such assets outstanding, sufficient to offset an increase of twenty-six basis points in the yield earned on such portfolio. Interest expense on deposits increased $768,000 or 24.17% to $3.9 million during the three months ended March 31, 2001 when compared to $3.2 million during the same 2000 period. Such increase was primarily attributable to increases of fifty-seven basis points in the cost of interest-bearing deposits and $26.0 million in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money increased by $67,000 or 14.96% to $515,000 during the three months ended March 31, 2001 when compared with $448,000 during the same 2000 period, primarily due to an increase of $5.0 million in the average balance of advances outstanding from the FHLB, partially offset by a seven basis point decrease in the cost of advances and other borrowed money. Net interest income decreased $166,000 or 3.70% during the three months ended March 31, 2001 when compared with the same 2000 period. Such decrease was due to an increase in total interest expense of $835,000, sufficient to offset an increase in total interest income of $669,000. The Bank's net interest rate spread decreased from 3.69% in 2000 to 3.27% in 2001. The decrease in the interest rate spread resulted from an increase of fifty-three basis points in the cost of interest-bearing liabilities sufficient to offset an eleven basis point increase in the yield earned on interest-earning assets. During each of the three months ended March 31, 2001 and 2000, the Bank provided $60,000, respectively, as a provision for loan losses. The allowance for loan losses is based on management's evaluation of the risk inherent in its loan portfolio and gives due consideration to the changes in general market conditions and in the nature and volume of the Bank's loan activity. The Bank intends to continue to provide for loan losses based on its periodic review of the loan portfolio and general market conditions. At March 31, 2001 and 2000, the Bank's non-performing loans, which were delinquent ninety days or more, totalled $4.2 million or 0.85% of total assets and $3.9 million or 0.88% of total assets, respectively. At March 31, 2001, $1.6 million of non-performing loans were accruing interest and $2.6 million were on nonaccrual status. The non-performing loans primarily consist of one-to-four family mortgage loans. During the three months ended March 31, 2001 and 2000, the Bank charged off loans aggregating $93,000 and $22,000, respectively. The allowance for loan losses amounted to $1.9 million at March 31, 2001, representing 0.60% of total loans and 46.22% of loans delinquent ninety days or more and $2.0 million at March 31, 2000, representing 0.73% of total loans and 51.28% of loans delinquent ninety days or more. Non-interest income increased $64,000 or 16.89% to $443,000 during the three months ended March 31, 2001 from $379,000 during the same 2000 period. The increase resulted from increases in fees and service charges of $14,000 and miscellaneous income of $50,000. -8- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Comparison of Operating Results for the Three Months Ended March 31, 2001 and 2000 (Cont'd.) Non-interest expenses decreased by $57,000 or 1.84% to $3.0 million during the three months ended March 31, 2001 when compared with $3.1 million during the same 2000 period. Salaries and employee benefits, advertising, and amortization of intangibles decreased $6,000, $88,000, and $30,000, respectively, which was sufficient to offset increases in occupancy, equipment and miscellaneous expenses of $27,000, $17,000 and $24,000, respectively, during the 2001 period when compared with the same 2000 period. Income taxes totalled $609,000 and $612,000 during the three months ended March 31, 2001 and 2000, respectively. The decrease during the 2001 period resulted from a decrease in pre-tax income. Liquidity and Capital Resources The Bank is required to maintain levels of liquid assets under the Office of Thrift Supervision (the "OTS") regulations sufficient to ensure the Bank's safe and sound operation. The Bank's liquidity averaged 7.35% during the month of March 2001. The Bank adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Bank also adjusts its liquidity level as appropriate to meet its asset/liability objectives. The Bank's primary sources of funds are deposits, amortization and prepayments of loans and mortgage-backed securities principal, FHLB advances, maturities of investment securities and funds provided from operations. While scheduled loan and mortgage-backed securities amortization and maturing investment securities are a relatively predictable source of funds, deposit flow and loan and mortgage-backed securities prepayments are greatly influenced by market interest rates, economic conditions and competition. The Bank invests its excess funds in federal funds and overnight deposits with the FHLB, which provides liquidity to meet lending requirements. Interest-bearing deposits at March 31, 2001 amounted to $19.2 million. The Bank's liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. Cash was generated by operating activities during the three months ended March 31, 2001. The primary source of cash was net income. Cash dividends paid during the three months ended March 31, 2001 and 2000 amounted to $928,000 and $914,000, respectively. The primary sources of investing activity are lending and the purchase of mortgage-backed securities. Net loans amounted to $314.8 million and $309.1 million at March 31, 2001 and December 31, 2000, respectively. Securities available for sale totalled $5.6 million and $5.7 million at March 31, 2001 and December 31, 2000, respectively. Mortgage-backed securities held to maturity totalled $113.9 million and $118.8 million at March 31, 2001 and December 31, 2000, respectively. In addition to funding new loan production and mortgage-backed securities purchases through operating and financing activities, such activities were funded by principal repayments on existing loans and mortgage-backed securities. -9- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Liquidity and Capital Resources (Cont'd.) Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as federal funds and interest-bearing deposits. If the Bank requires funds beyond its ability to generate them internally, borrowing agreements exist with the FHLB which provide an additional source of funds. At March 31, 2001, advances from the FHLB amounted to $35.6 million. The Bank anticipates that it will have sufficient funds available to meet its current loan commitments. At March 31, 2001, the Bank has outstanding commitments to originate loans of $16.3 million. Certificates of deposit scheduled to mature in one year or less at March 31, 2001, totalled $182.6 million. Management believes that, based upon its experience and the Bank's deposit flow history, a significant portion of such deposits will remain with the Bank. Under OTS regulations, three separate measurements of capital adequacy (the "Capital Rule") are required. The Capital Rule requires each savings institution to maintain tangible capital equal to at least 1.5% and core capital equal to 4.0% of its adjusted total assets. The Capital rule further requires each savings institution to maintain total capital equal to at least 8.0% of its risk-weighted assets. The following table sets forth the Bank's capital position at March 31, 2001, as compared to the minimum regulatory capital requirements:
To Be Well Capitalized Under Prompt Minimum Capital Corrective Actual Requirements Actions Provisions ---------------------------- ---------------------------- ---------------------------- Amount Ratio Amount Ratio Amount Ratio ------------- ------------- ------------- ------------- ------------- ------------- Total Capital (to risk-weighted assets) $ 41,512 16.32% $ 20,344 8.00% $ 25,431 10.00% Tier 1 Capital (to risk-weighted assets) 39,808 15.65% - - 15,258 6.00% Core (Tier 1) Capital (to adjusted total assets) 39,808 8.18% 19,466 4.00% 24,332 5.00% Tangible Capital (to adjusted total assets) 39,808 8.18% 7,300 1.50% - -
-10- PAMRAPO BANCORP, INC. AND SUBSIDIARIES QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK --------------------------------------------------------- Management of Interest Rate Risk. The ability to maximize net interest income is largely dependent upon the achievement of a positive interest rate spread that can be sustained during fluctuations in prevailing interest rates. Interest rate sensitivity is a measure of the difference between amounts of interest-earning assets and interest-bearing liabilities which either reprice or mature within a given period of time. The difference, or the interest rate repricing "gap", provides an indication of the extent to which an institution's interest rate spread will be affected by changes in interest rates. A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-rate sensitive liabilities, and is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest-rate sensitive assets. Generally, during a period of rising interest rates, a negative gap within shorter maturities would adversely affect net interest income, while a positive gap within shorter maturities would result in an increase in net interest income, and during a period of falling interest rates, a negative gap within shorter maturities would result in an increase in net interest income while a positive gap within shorter maturities would result in a decrease in net interest income. Because the Bank's interest-bearing liabilities which mature or reprice within short periods exceed its interest-earning assets with similar characteristics, material and prolonged increases in interest rates generally would adversely affect net interest income, while material and prolonged decreases in interest rates generally would have a positive effect on net interest income. The Bank's current investment strategy is to maintain an overall securities portfolio that provides a source of liquidity and that contributes to the Bank's overall profitability and asset mix within given quality and maturity considerations. The securities portfolio is concentrated in U.S. Treasury and federal government agency securities providing high asset quality to the overall balance sheet mix. Securities classified as available for sale provide management with the flexibility to make adjustments to the portfolio given changes in the economic or interest rate environment, to fulfill unanticipated liquidity needs, or to take advantage of alternative investment opportunities. Net Portfolio Value. The Bank's interest rate sensitivity is monitored by management through the use of the OTS model which estimates the change in the Bank's net portfolio value ("NPV") over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The OTS produces its analysis based upon data submitted on the Bank's quarterly Thrift Financial Reports. The following table sets forth the Bank's NPV as of December 31, 2000, the most recent date the Bank's NPV was calculated by the OTS. -11- PAMRAPO BANCORP, INC. AND SUBSIDIARIES QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ---------------------------------------------------------
NPV as Percent of Portfolio Change in Net Portfolio Value Value of Assets Interest Rates ---------------------------------------- ------------------------------- In Basis Points Dollar Percent NPV Change In (Rate Shock) Amount Change Change Ratio Basis Points ------------------ ------------ ------------- ------------ ------------ --------------- (Dollars in Thousands) 300 $ 27,872 $(29,894) (52) 6.17 % (568) 200 37,999 (19,767) (34) 8.19 (366) 100 48,353 (9,413) (16) 10.16 (169) Static 57,766 - - 11.85 - -100 63,715 5,949 10 12.86 101 -200 68,568 10,802 19 13.64 179 -300 76,156 18,390 32 14.85 300
Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in NPV require the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV model presented assumes that the composition of the Bank's interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV measurements and net interest income models provide an indication of the Bank's interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on the Bank's net interest income and will differ from actual results. -12- PAMRAPO BANCORP, INC. PART II ITEM 1. Legal Proceedings ----------------- Neither the Company nor the Bank are involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition of the Company and the Bank. ITEM 2. Changes in Securities --------------------- Not applicable. ITEM 3. Defaults Upon Senior Securities ------------------------------- Not applicable. ITEM 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The Annual Stockholders' Meeting was held on April 25, 2001. The following matters were submitted to the stockholders: 1. Election of two directors: A. Directors elected at the meeting for terms to expire in 2004. Number of Shares -------------------------------- For Withheld ------------ -------------- Dr. Jamie Portela 2,320,353 7,631 Mr. James Kennedy 2,319,160 8,824 The following directors' terms of office as a director continued after the meeting: (i) Mr. William J. Campbell (ii) Mr. Daniel J. Masarelli (iii) Mr. John A. Morecraft (iv) Mr. Francis J. O'Donnell -13- PAMRAPO BANCORP, INC. PART II (Cont'd.) ITEM 4. Submission of Matters to a Vote of Security Holders (Cont'd.) ---------------------------------------------------
Number of Shares ---------------------------------------------- For Against Abstained ------------- ----------- ------------- 2. The ratification of Radics & Co., LLC as independent auditors of the Company for the fiscal year ending December 31, 2001. 2,323,618 2,931 1,435
ITEM 5. Exhibits and Reports on Form 8-K -------------------------------- (a) The following Exhibits are filed as part of this report. 3.1 Certificate of Incorporation of Pamrapo Bancorp, Inc.* 3.2 By-Laws of Pamrapo Bancorp, Inc.* 11.0 Computation of earnings per share (filed herewith). * Incorporated herein by reference to 10-K Annual Report for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on March 30, 2001, Commission File No. 000-18014. (b) Reports on Form 8-K NONE -14- SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PAMRAPO BANCORP, INC. Date: May 10, 2001 By /s/ William J. Campbell ________________________ ________________________________ William J. Campbell President and Chief Executive Officer Date: May 10, 2001 By /s/ Gary J. Thomas ________________________ ________________________________ Gary J. Thomas Vice President, Chief Financial Officer -15-